Uganda seeks investor to develop $2.5B refinery

Uganda is looking for a lead investor to develop a refinery estimated to cost $2.5 billion, two weeks after issuing its first license to China National Offshore Oil Corp. as it seeks to exploit reserves.

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By FRED OJAMBO

ENTEBBE (Bloomberg) -- Uganda is looking for a lead investor
to develop a refinery estimated to cost $2.5
billion, two weeks after issuing its first production license
to China National Offshore Oil Corp. as it seeks to exploit
reserves.

The investor, either a company or a group of them, will be
named by April and will take an interest of as much as 60 % in
the facility, which is proposed to have capacity of 60,000 bpd,
Robert Kasande, an assistant commissioner in the Energy
Ministry, said by phone.

Uganda, classified as one of the worlds poorest
nations by the World Bank, discovered oil in 2006 and has an
estimated 3.5 Bbbl of crude, according to the Energy Ministry.
Tullow Oil, Cnooc and Total are jointly developing the finds.
The country has sub-Saharan Africas fourth-biggest oil
reserves.

We need to finalize this process we have started by
April, he said. The cost is still tentative
as the accurate amount will be known after the investor
conducts a feasibility analysis, he said.

The governments stake in the facility will account for
as much as 40 %, and the nation has invited Kenya, Rwanda,
Burundi and Tanzania, which are partner countries in the East
African Community, to buy an interest of as much 10 % in the
facility from Uganda, he said.

The refinery may be developed in two
phases, starting with a daily capacity of 30,000 bbl, Kasande
said. Construction will commence in 2015,
while production starts 2017, he said.

Land Secured

The government secured 29 sq km of land for the refinery in the western district of
Hoima and will hand it over to the investors by April after
compensating affected residents, Kasande said.

The Energy Ministry on September 25 awarded Cnooc the first
production license to develop the Kingfisher area in the
Albertine region at a cost of $2 billion over four years. The
area is estimated to hold 635 MMbbl, of which 196 MMbbl are
recoverable. Kingfisher will pump 30,000 to 40,000 bpd, the
ministry said.

Tullow and Total will get an oil-production licenses for
other areas within weeks, Peter Lokeris, the
minister of state for mineral development, said.

Uganda is eyeing both local and regional markets for its oil
products, Kasande said. Landlocked Uganda is also negotiating
with oil companies to build a pipeline to the Kenyan port of
Lamu, according to the Energy Ministry said. President Yoweri
Museveni
and his Kenyan counterpart Uhuru Kenyatta agreed to develop the
link in June, saying it would also have a loop to South
Sudan.

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why would president museven harry to negotiat the construction of oil pipeline even before the const of the rifinary is dane?, how will we be able to account for product that is flown through the pipe and know how much is sold?. I think we first be patiant